SodaStream International's past two quarters could make it hard for investors to follow. How does it stack up against Green Mountain Keurig and Coca-Cola?

SodaStream International (NASDAQ:SODA) announced earnings for the first quarter on May 14, and the report raised some concerns. Sales were flat from a year ago, and net income plunged 85%. Are potential SodaStream customers holding off until they see what The Coca-Cola Co. (NYSE:KO) and Keurig Green Mountain (NASDAQ:GMCR) bring to the market?

Let's take a closer look at what's happening with SodaStream, Coca-Cola, and Keurig Green Mountain. Where should investors put their money?

While SodaStream is still trying to get it together, Keurig reported strong growth this past quarter. Revenue was up almost 10% to $1.1 billion, net income increased 22% to $162 million, and after some consolidation in the industry, the company is now the third largest coffee seller in the world. But before that makes it seem as if Keurig doesn't have any room to grow outside of its expansion into soda, consider this: Keurig controls only a little more than 3% of the coffee market. There's still plenty of room to grow coffee sales.

Coke going flat, tooThis gets to the crux of Coca-Cola's decision to deepen its investment in Keurig. Coca-Cola's sales have been flat for the past two years and very possibly could begin to decline as soda in North America -- the company's largest market -- continues to lose market share to alternative beverage choices.

Coca-Cola has to find a growth market, and it's doubling down on its partnership with Keurig. A recent announcement disclosed that Coke will increase its Keurig Green Mountain holding to 16% of the company's stock, via acquisitions on the open market over the next year.

SodaStream's mixed bag It's important to get past the headlines. The report contains good and bad, but it definitely moves us to a better understanding of the business.

The badNot only was SodaStream's revenue flat versus last year, but it also reported a huge 28% decline in the Americas. That isn't the company's largest market, but it is the largest growth opportunity. SodaStream has less than 1% penetration in the U.S., while 9 in 10 Americans drink soda. However, sales in Western Europe -- where SodaStream has significantly higher penetration -- grew 17% in the quarter.

As a matter of fact, SodaStream grew sales by at least 17% in every market except the Americas.

The goodSodaStream grew sales in every market except the Americas by at least 17% -- OK, it really is both good and bad. Adoption of the product in both newer and more developed markets is a good sign of a sustainable business. Additionally, sales of consumables (both CO2 and flavors) grew by 15% in the quarter. People are using their SodaStreams.

Getting deeper; applying contextCEO Daniel Birnbaum gave some much-needed color on the earnings call, breaking out details for the Americas:

Soda maker sales declined 69%.

Flavor sales declined 20%.

CO2 sales increased 27%, to a record 1.4 million units.

Birnbaum made a point to remind us that the first quarter was up against a huge 78% jump in soda maker sales, and more than 100% growth in both flavor and CO2 sales from a year ago, results of the aggressive end-cap launch program at Wal-Mart, which ended last May.

He also described an important aspect of SodaStream's business: It sells to retailers, which in turn sell the product to us. Sell-in -- the numbers above -- is when SodaStream sells the product to a retailer, and sell-out is when the retailer sells to a consumer. This is important, because it gives us better context as to what the consumer trends are. Birnbaum said that the sell-out numbers looked more like this:

Soda makers down 49%.

Flavor sales down 6%.

CO2 sales increased 47%.

So when we take the seasonality of having retailers stock up for the holiday season out of the equation, and apply the context of last year's first quarter as including the hugely successful Wal-Mart launch, it makes the numbers in the Americas a little more palatable.

Find the value, but don't forget what matters mostLet's look at some valuation metrics:

From a price-to-earnings ratio, the market is pricing SodaStream like Coca-Cola, while Keurig Green Mountain is commanding the premium that its earnings growth has earned. But the reality is, if you don't believe SodaStream will return to growth in the Americas, it's an irrelevant point.

Foolish bottom line: Do you believe in the growth story, or not?The reality is, both companies make for compelling investments, and for many of the same reasons. Additionally, it's hard to see how SodaStream, with its focus on value, can get into any real competition with Coke and Keurig, which will be leading with the Coke brand and not competing on price. The bottom line? This is a huge addressable market, and Keurig and SodaStream both should do great.

You have to decide if you think SodaStream will see growth again in the Americas. I do.

Jason Hall owns shares of Amazon.com and SodaStream, and manages an account with shares of Coca-Cola. The Motley Fool recommends Amazon.com, Coca-Cola, Keurig Green Mountain, and SodaStream; owns shares of Amazon.com and SodaStream; and has options on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Author

Born and raised in the Deep South of Georgia, Jason now calls Southern California home. A Fool since 2006, he began contributing to Fool.com in 2012. Trying to invest better? Like learning about companies with great (or really bad) stories? Jason can usually be found there, cutting through the noise and trying to get to the heart of the story.
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